With No. 1 Draft Pick Markelle Fultz Coming Aboard, Business Is Booming For The 76ers

Kurt Badenhausen
,
Forbes Staff
I cover sports business with rare dips into b-schools, local economies

The Philadelphia 76ers selected Washington point guard Markelle Fultz with the No. 1 overall pick Thursday night at the NBA Draft in Brooklyn. The move comes days after the Sixers completed a blockbuster trade with the Boston Celtics for the top spot in exchange for the third overall pick and a future draft selection.

Markelle Fultz adds another piece to the Process in Philadelphia. (Photo by Christian Petersen/Getty Images)

Fultz joins a core of previous high picks, Joel Embiid, Ben Simmons and Jahil Okafor, in what was dubbed “The Process” where the team tanked on the court and accumulated assets in the draft. The Sixers are one of the NBA's most storied franchises with legends like Wilt Chamberlain, Julius Erving, Charles Barkley and Allen Iverson starring in the City of Brotherly Love, but the last few years have been far from glorious. The 76ers lost 81% of their games over three seasons, including an NBA-record 28 games spanning the 2014-15 and 2015-16 seasons.

Fans stayed away in droves early in the Process, but they returned slowly last season and are now all-in with the addition of Fultz. "Fortunately, we're able to break the Sixers' all-time record for season-ticket memberships," said Sixers chief sales and marketing officer Christopher Heck in an interview with CSN Philly.

The Sixers sold out their full-season ticket packages with 14,000. Heck says the team was trending towards a sell-out of the 41 home games, but the trade for the No. 1 pick accelerated things with hundreds of sales since the news broke on Saturday.

Season ticket sales at this time in June 2013 were a paltry 3,400 and last year were a shade under 10,000. The 76ers ranked first in the NBA in new full-season ticket packages each of the past two seasons. The club started a wait-list program this week for those fans still interested in tickets.

The Wells Fargo Center is one of the biggest buildings in the NBA with a capacity of 21,000. Attendance of 20,000 would have ranked third last season behind only the Chicago Bulls and Cleveland Cavaliers. It is a long way from four years ago. The Sixers ranked No. 29 in the NBA with per game attendance of 13,869 for the 2013-14 season and last the following season at 13,940 (the team was No. 18 last year at 17,330).

It is not just attendance where the Sixers are thriving. Heck says, “At the league level, we’ve been No. 1 in growth since January not only in social media, [but also] local television ratings, ticket sales and sponsorships.” The Sixers also became the first NBA team to ink a jersey sponsorship deal when it partnered with StubHub last year under a three-year pact worth $5 million annually.

Attendance is vitally important from a financial standpoint for the Sixers, who are a tenant at Wells Fargo, which is owned by Comcast. The Sixers are limited in what they collect from premium seating, arena sponsorships and non-basketball revenue, which are huge contributors to the bottom line of most NBA clubs. The Sixers posted the overall lowest revenue in the NBA during the 2015-16 season.

Despite the poor results on the court and low revenue, the Sixers have been a slam dunk investment for the ownership group led by Joshua Harris and David Blitzer. They purchased the team in 2011 for the cut-rate price of $287 million. The price was limited by the lack of arena revenue available to the team and an impending lockout of NBA players that cut the 2011-12 season to 66 games.

Their timing was perfect. The lockout led to a more team-friendly collective bargaining agreement with players getting a smaller slice of revenue. Three years later Steve Ballmer paid $2 billion for the Los Angeles Clippers and the NBA inked a new $24 billion TV contract with ESPN/TNT worth three times the previous agreement on an annual basis. Franchise values soared and the Sixers are now worth $800 million per Forbes' latest look at the business of basketball.

"It feels like we're a little bit of the center of the basketball universe right now," said Sixers President of Basketball Operations Bryan Colangelo after the Fultz pick last night. The Process is not complete, but fans are jumping on board with Sixers expected to be a high-flying growth stock over the next half-decade.